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Rangers applies

08 January 2018
Issue: 4630 / Categories: Tax cases

Landid Property Ltd and others (TC6111)

PAYE liability of employee benefit trusts

Between 2007 and 2008 the taxpayers set up employee benefit trusts with sub-funds for each employee and their families. The employers contributed funds to the sub-funds which made interest-free loans to the employees.

A dispute arose as to whether the sums paid into each sub-fund were earnings subject to income tax and National Insurance.

The First-tier Tribunal referred to the Supreme Court’s decision in RFC 2012 plc (in liquidation) (formerly Rangers Football Club plc) v Advocate General for Scotland [2017] STC 155 and decided the payments were rewards for service. The payment to the charity that was required before the trust funds were held for the benefit of employees did not amount to the kind of contingency envisaged in Rangers. The payment to the charity was preordained in that under the scheme as it was intended to operate there was no realistic possibility that it...

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